“Good Money Drives Out Bad” Among Diversifying e-Moneys: Cryptocurrency, Stablecoin, and Digital Community Currency

Abstract

The present chapter depicts the modern outlook of evolution of money in the twenty-first century as the ongoing process of diversifying such private e-moneys as cryptocurrency, stablecoin, and digital community currency and then gives an answer to the central question for understanding modern money under the myth of “one nation, one money,” which is the enigma of what fiat central bank notes are. Differently from MMT, they are neither material money nor credit money, but purely informational “ideational money” or “symbolic money” regardless its present status as “debt” on the balance sheet of BOJ. Crucially, such real nature of modern money is shared by all the aforementioned private moneys. This chapter further explains, as Hayek clarified in his “Denationalization of Money,” the conditions for evolutionary principle of choice in currency in terms of different “quality” with a non-fixed rate expressed as “good money drives out bad,” contrary to famous Gresham’s law only regarding different “quantity” only in a fixed rate expressed as “bad money drives out good.”